GrainCorp looks to future with recharged supply chain


Logistics focus on rail as mode of choice and the shedding unproductive assets

GrainCorp looks to future with recharged supply chain
GrainCorp says governments also must respond to realise gains

 

GrainCorp has shaken off the rejection of its takeover by Archer Daniels Midland with a move to rationalise its export path.

As the Foreign Investment Review Board admits to the Fairfax press that the block earlier this year on the $3.4 million deal was a political decision, the Australian-owned agribusiness is starting an ambitious three-year $200 million supply chain modernisation to optimise its use of rail freight and reduce that of trucks.

With close to 40 per cent of its rural sites accounting for 10 per cent of the grain it handles, the agribusiness will seek a more efficient clustering of its network but acknowledges its aim to halve the cost of transport will need government cooperation.

Under the banner, Project Regeneration, GrainCorp will seek to: reshape the country network; form localised cluster operations; introduce end-to-end export logistics; institute rail loading improvements.

"Project Regeneration represents the single largest capital investment in the country network in GrainCorp’s history," GrainCorp Executive Chairman Don Taylor says.

"It will deliver a faster and more efficient rail capability for the benefit of growers and grain buyers."

The initiative aims to return up to 1 million tonnes of grain to rail, through reduced train cycle times and streamlined, more reliable operations.

"Rail freight performance has been in decline for some years," Taylor says.

"Slow loading and short sidings mean grain trains are shunted across multiple sites and cycled slowly, creating both cost and complexity.

"Furthermore, poor track conditions limit wagon weights and track speed, adding to inefficiencies.

"We estimate rail costs in eastern Australia are $10 per tonne higher than best practice, reducing returns to growers by around $180 million1 in an average season."

The company’s investment seeks to reduce rail costs by $5 per tonne. However, it says the full benefits of our network investment – and the rest of the $10 – "can only be unlocked if there is also further investment by track owners in the government-owned rail infrastructure that supports the entire industry".

About 80 positions will go as the country network will be configured into 34 clusters, each centred on one or two "Primary" sites, geared to maximising the amount of grain transported by rail. Primary sites will be export-focused, providing fast cycling point-to-point service for unit trains between country and port.

Several "Major" sites per cluster will service the domestic market by road, and run shorter shuttle rail services in NSW for both export and domestic. Many clusters will also have a number of special purpose "Flex" sites, which will provide additional capacity for specific segregations or customer requirements.

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